joining me, olivia sterns and adam johnson. let's get to this morning's top stories. markets continued their decline. asia and no europe see lower equity prices. bond yields grind lower in germany. european leaders will meet on recession fears today. yesterday, the imf caught its global forecast. that moved markets. we saw that yesterday. it continues today. in hong kong, protest leaders will hold the first direct negotiations with government leaders. the government will not talk .bout the 2017 leadership election protest leaders decidedly not happy, although, things there moderating after what we saw a week ago.

>> even though they're facing such problems, they still utilize two agendas. the constitutional foundation and legal framework of the to full theform, public. we're disappointed with their strategy. we urge the government to be brave and face the issues. >> in, islamic state militants battle kurdish forces in a city among the border directly on the border with turkey. kurds say they have slowed the militants advance to the city of kobani. unitednetta says the states needs to look at islamic state as a real threat to the country. he spoke with charlie rose. >> i view this, charlie, as a continuum from 9/11. 9/11, we declared war on terrorism because of the attack they made on our country. i think when you look at the broad sweep of terrorism, isis

is another piece to that. they are intent on attacking this country as well. i think we have to view this in that larger context. technology space, and other tech company on the verge of splitting up, cording to people familiar with the matter. symantec exploring a breakup. one company would sell secured he programs and the other would focus on the legendary data storage. it may be a few weeks before there is any announcement. take a big hit from the worst strike in history . the airlines as a walkoff by pilots that cost more than 600 $30 million. air france pilots went on strike for more than two weeks last month over the airlines plan to create a new low-cost carrier. baseball, for the fourth straight year, st. louis is going to the national league championship series. matt adams three run homer gave

the cardinals a three-to win over the dreaded los angeles dodgers. st. louis wins the best of five series three games to one. they will face the san francisco giants will stop the giants beat the washington nationals 3-2. 13-1 asts take that well. there are the top headlines from the bloomberg terminal. let's go to the data check. markets, equities, bonds, commodities. the euro does nothing. real nuances here. $87 on west down texas intermediate. showing the angst we saw yesterday with the dow will under 17,000. to business insider. this is the classic five year five-year break even. am i right? five-year outcome of five years. >> this is when investors think

the trading will be five years from now. dips ofwe go with the angst. boy, did we plunge down in the last week. it folds over the equity market, doesn't it? >> is sure does. the imf lowering its global outlook for the third month. in theory, you have lower earnings. >> in the point that were making, where we are on the five-year, five year, the levels in the past have triggered stimulus. the article was saying, we won't likely see another cutie, but perhaps we will see verbal guidance. >> i have no idea. >> a means talking down. weekend early guidances -- >> how did that go, by the way? >> it went great. >> forward guidance, and it has been working. out anded to figure bring in a pro. u.s. stock futures are steady

after the 270 point truck yesterday. the 10 year yield is hovering at a 15 month low. anxiety about the inflation. that is a conversation we are focused on. michael holland is joining us, long-term investor and good friend of the show. michael, is what we're talking about an angst coming out of the fed changing your bullish view in anyway? >> it changes how we approach what i think remains able market, but i think the easy days, the last five years have been the easiest bull market of my life as we have talked about cost in great part by the feds it sure near action -- extra ordinary action including the qe scarlet was talking about. now that the training was are coming off, the lack of volatility is going to bring this to what i would think would be an end of that awful phrase, the new normal. which is an oxymoron. there is nothing normal about the last five years. in fact, we have come through a

.eriod of incredibly low market what we are up with i think is the true normal which will be volatility that makes us feel like the last couple of weeks, the angst, the tom keene angst of the last few weeks is something that is very normal. >> you are killing me, michael. we are down 3.22%. it is a correction. it is a bear market. it is terrible. withn, how do we get here 3.22% on the dow? the wheels are coming off the bus. >> because we had a triple digit a few days of triple digit declines. and we are going to have more of those in the future. this is what the normal market is like. the true normal has volatility and gets people scared. people keep

valuations reasonable if they're worried. that is where we are right now. i think that is why the bull market is not over. roxy tom keene asked is not the new normal. it is business as usual. yesterday, the imf cited -- >> are you calling making? >> perhaps. callout frauded earlier this past spring. what pockets of the market you think are overvalued? >> no question, you do have theh and social media and biotech area. he of the opposite, the antithesis of that in the large tech cap companies. it is interesting to see this is what a normal looks like. you get pockets of overvaluation and undervaluation. in the late 1990's whatever thing was overvalued, including estate,ate am a -- real that is when you have the and of abull market.

we're not anywhere near that right now, i don't believe. >> you said this has been the easiest "bull market" and if that is about to change, what are you doing with your money? >> let me correct myself. i don't think the fed was inflating everything but rather they set out six years ago and said, we want to do what we can to keep unemployment as low as possible and get the economy going. we know the administration and congress aren't going to do anything, but what we can do is get natural asset prices up. they succeeded admirably. all the naysayers who said the inflation result was going to be extraordinary, going to have hyperinflation, they been proved wrong by ben bernanke and janet yellen. moving into right now, i think what we have is a situation where the fed is going to stay there. they are going to be there with zero interest rates through next summer.

i think they're not going to do anything until the economy looks a little better. i think the comments yesterday underscored that. >> sounds like any time we trade down, it is still an opportunity to come in and buy stocks on the cheap. michael holland, thank you as always. >> as you see the markets move in the imf meet in washington, stunning decline and inflation expectations, concern over global slowdown, just think, french crew down 25% from its 2011. with all that said, when you just big to jagdish bhagwati, not only a great tour de force into free trade, but jagdish bhagwati has appeared on "the simpson's." you haven't, i haven't, bolivia has an. what was it like? do they give you advanced warning? >> no, it just happened. i was teasinger,

peter diamond and said i had a much bigger role. , you're inbhagwati defense of globalization is considered one of the classics of modern economics. out inne lagarde is search of a defense for her globalization. do you believe in christine lagarde's the new mediocre? >> yes. but at the same time, we must remember so many people are forecasting all the time. noah to my knowledge has taken into account the imf's track record. if you ask me to bet on the imf forecast, i would say, i'm going to bet against -- leaprt of that is the 2015 of faith to a better global economy. to consider trait being reconsidered -- rekindled so we can get a better 2015 and 2016? >> i think we can, but that is

were president obama is a little upside down, in a way. he is the one who basically kicked it around, which would have given a big push for the lateral system which then we could have done all of the tpp's and so on. they became alternatives to. i think that is where the u.s. -- i mean, the president is leaving from behind has hurt us. in fairness, professor, a lot it has beenuld say floundering for quite some time and not just president obama. i want to ask about the risks the imf called out yesterday. which among those are you most concerned about? >> i would say the russian situation because i think they're doing exactly what i fear now in light of the current

situation, which is that everybody is going to be turning inwards. even in the united states, we talk in similar terms. the president is always saying, we must stop the outsourcing, which is another way of saying, we wish we were protectionist. in russia, it is a same thing. ,here really turning inwards talking about doing everything at home. >> focusing on eastern europe and russia. >> and we know there is no more mozzarella in moscow. it is true because of the food ban. >> there have been protests in moscow because of no mozzarella. they can't bring in food from the outside. >> are you kidding? >> serious. >> and they're not when you get mcdonald's, also. >> the russians shut down free mcdonald's in moscow for sanitary reasons. amazingly, they all got shut down on the same day. what richard haass with us in

the next hour. cut medical benefits for about 30,000 workers. they say they will no longer offer coverage to employees working less than 30 hours per week. the move comes in response to mounting health-care costs and the growth of alternatives available under the affordable care act. billion and pershing square hoped the third time's a charm, planning yet another bid for allergan, the maker of botox. this time, increase could be varied at about $15 per share. bill ackman first approach the company back in april. float his retirement system is set to cut pimco investments po box was at the state will significantly reduce the $2 billion pension they have invested with the firm and also withdraw more than $1 billion for the for a one-stop program offer to workers. go to the twitter question

of the day. >> we just heard from michael holland how he is playing to selloff. our twitter question of the day, what is your investment strategy as stock selloff? tweet off. going to the triple leverage cash fund. three other percent cash. >> that is time strategy. we will be right back on "bloomberg surveillance." ♪

>> good morning, "bloomberg surveillance." international monetary fund, look for that at 10:00 this morning on "market makers." the imf out with a stunning pre-report over the last number

of days on global slowdowns. the official report at 9:00 a.m. this morning. look for those headlines across the bloomberg terminal. >> walmart is getting health insurance for another 30,000 part-time workers. what is part-time? less than 30 hours per week for walmart. the other employees are raising premiums, as u.s. corporations is to contain costs in the wake of the federal health care law, the affordable care act. obamacare has changed the map for corporate america. it does not require omar to cover these part-time workers. hereof is if they do cover the workers, that could potentially make them ineligible for the federal subsidies so the can get their own plan on the government exchanges. the line is essentially in mood with similar from target, home depot, and walgreens. walmart says expect to see health care costs rise by more than $500 million in the coming years. >> there it is what walmart,

with some challenges. this goes to the atomization of our labor force. jagdish bhagwati with those from columbia university. he wrote a book on the american labor economy with alan blinder. the labor just kids ground down and ground down. when does it stop? >> that is a tough one, certainly. i think the only real remedy for that, in my judgment, is to actually create more demand and keep away from protectionism and so on. having international trade is another way to create demand in your economy. what has happened with ben bernanke and janet yellen, we have spent more money on qe2. in a closed economy, the money just lies around because we're not spending fiscally. fossil --

>> in an open economy, it spills over. >> i'm a fossil and you're too young to remember this, olivia, you grew up in this. >> olivia is a fossil? >> you don't remember the normal. thehat's true, but affordable care act was actually end of people my age, healthy people, to get them to try to sign up workers. my question for you, do you think these walmart employees are better off? it is going to become a very big issue for the elections. the obama administration is saying these wall mart employs are better off because before the aca, they did not have any other choice. >> i think they have a point. i think they are better off in the sense that i think in the system as a whole, not just walmart, there's greater attention being paid now to workers wealth because wages have been stagnant for such a long time. i think one way in which

international trade has helped us out is because when the money is lying around, and naturally goes to other countries. to brazil, india, china, and so on. that lowers the dollar. when you lower the dollar, it needs they export more. in a way, we're been able to keep up demand. that will be more difficult as other countries begin to come down. worknk we really have to at the mystic generation of demand brother than -- domestic generation of demand. >> bets continue with jagdish bhagwati and look at india as well and is wonderful book "why growth matters." >> coming up, richard haass will join us. he holds the rank of ambassador. we were just talking about the global economic picture, among other things, plenty to discuss clinically. you are watching "bloomberg surveillance."

your tablet,ing on your phone, and virtually every electronic device out there. we will be right back. ♪

good morning, everyone. on the turkish border, this is syria and kobani with her has been battling into turkey. it is been significant protest by kurds angry over turkey's response to the islamic state. it is a confused state, to say the least. richard haass will join us in the next hour with an update on what we see in the middle east. good morning, it is "bloomberg surveillance." time for a morning must-read.

let me get right to that. the idea is gold. a smart note about goldbug response to lower gold prices. the price of gold can't fall. he can only be manipulated lower. there is the emotion in the market. the reality is, microeconomics under gold, jagdish bhagwati with us, with life in india. the basic hope in the goldbug's is china demand and india demand support the market. will they? >> certainly, the indian one will. i'm not sure about the chinese one. it is a safe bet to have. i think recently, not right now, the main problem has been that it is been generally weak and

people are flying from all currencies into gold. that is a safe bet. >> is it with elasticity or responsiveness, as the price comes down, will indians died in ever more to buy more and more gold? >> it is a continuing appetite. you will get a little surge, but it is not as if all hell will break loose. india is like a sinkhole. florida -- a sinkhole in florida? >> jagdish bhagwati with us. good morning, it is "bloomberg surveillance." ♪

>> good morning, "bloomberg surveillance." these are live images from the turkish border with syria. this is far east of damascus on the way to kurdistan, spread across three nations, near kobani. a battle going on between the allies. various in turkey.ove kurds protesting over the lack of response by turkey. it is a jumble, to say the least, this morning. there we are at the syrian border with turkey. let's get to our top headlines. >> just to delve into that image theere talking about,

strategic town about to fall into the hands of islamic state, advancing on kobani that sits on the border of turkey. u.s.-led airstrikes have done little to blunt the offensive of isis or islamic state, if you prefer. north korean leader still among the missing. he is not been seen in public for more than a month. last month, he missed a parliamentary session. the media reported he had surgery. their concerns he has gout. kongrotest leaders in hong are crying foul. they say the key political demands have been excluded from upcoming talks with the government, including possibility of rolling back of the 2017 city

chief executive election. direct negotiations are set for friday. this is a very volatile and evolving story. those are the top headlines for now. >> let's get a data check. this sets us up for jon ferro in europe. hydrocarbon, brent crude, not through 90 yet. really gets your attention. following the markets, coverage of the markets an hour ago, was superb. eu leaders will meet today to discuss economic slowdown and recession. how do they respond to a german yield under ,90 percent? >> you have to ask the question, why keep balancing the book's in germany and that is the big debate here. if you can borrow money, tenure money at less than 1%, why is there and assistance in germany

the german government to carry on balancing the >> when the rest of the eurozone a struggling? perhaps the big curveball and the pressure will come from the fact that germany itself is under pressure. >> we had two difficult days of german economic data back to back. hollande, renzi, they all be today. i think there will turn to angela merkel. what is the debate to jumpstart that economy? >> the debate is what the debate is always been, and that is the countries like italy need to reform. i will give an example of what i mean by reform. we talk so much about this word. what does it mean? in italy, if you have a company that is larger than 15 employees, you have been exposed to a whole new set of labor market laws. it makes a very, very difficult to fire anyone. you have a situation in italy where 95% of companies have 10 employees or less.

literally, little incentive to grow. rates to record low, but if the demand for credit just isn't there. italy has very much a structural problem. italy has been struggling for the last 15 years. they have been in and out of recession for two decades now. >> i came across an anecdote. cutstory is people who senate members here in italy, their pay was trimmed to cap of 100,000 euros, sort of a telling indicator of just how misguided, mispriced some things are going in the giant economy. i know matteo rezni is facing a key vote to make it easier for firings. what does he have to do to shake up the labor market? >> first, yes to get past the copy itself and the deliver on what he is talking about. theirst, he has to get past

vote itself and the deliver on what he is talking about. the problem is not going away anytime soon. >> jagdish bhagwati, what is the mission? you focus on global trade. what is the mission right now for europe, realistically, without throwing money at them? >> for europe? >> yes. >> i think what is being said just now, which is that you need to loosen up the labor market and that is very important. >> so it is artificial. that is the problem. >> it would make a huge debt on efficiency, which they need. they cannot live by exports alone. whether they can actually hack it against the united states remains an open question. but what you can do, something within your own power, and i think that is where the reason why labor growth are important

if you can't fire, you won't higher, right? then you're stuck with your labor force. today in the world economy, there's so much volatility. if i invest in something today, i'm not sure i'm going to be up to have a competitive advantage in a particular specialization. i have to be able to get rid of people in case it doesn't work out. this is why countries like france and italy are really in bad shape because they have labor laws which make hiring very difficult. look at the french entrepreneurs. dumb ort as if they are something, but they invest elsewhere. they don't invest in their own country. i think that is a real problem. to get around this problem, you have to say, look, we just have to do this. >> you said earlier, speaking

about the importance of drumming of domestic demand, jon, that is something that everyone is pressuring germany to do. the head of the bank has been saying is critical of stimulus. how big of a wake-up call do you think the recent data coming out of europe, industrial production yesterday coming out the worst in five years, is for the central bank? >> more than a wake-up call for the german bank than the central bank. it pushed yields down. it took away the incentive for the likes of italy and spain. in italy with yields around the same level as u.s. treasury, where is the incentive for italy to really reform? where is the big pressure on matteo rezni? they haven't exactly got their feet to the calls, have they? thank you, jon ferro. our twitter question of the day --

>> coming up, we will show you just how much lower oil prices are hurting russia's economy. it is today single best chart. this is "bloomberg surveillance." ♪

>> good morning, "bloomberg surveillance." it has been gorgeous in new york city. morning.orthy damp was a slightly morning at 3:45 when i walked out of my apartment. thehe central banker of world will be on his way to the international monetary fund speaking in new york this morning. bolivia has that. >> oil prices continue to fall and the decline is inflicting damage. we are on how different oil price scenarios may affect russia's budget. this chart shows on average oil price of $90 a barrel would give russia a budget deficit of about 1.2% of gdp by next year. we got this data from spear bank

, russia's largest lender. the write access is showing the knowledge budget under different oil price scenarios. messages vladimir putin cannot balance his book with oil at nine dollars a barrel. he's one of the think about cutting spending. all the hydrocarbon analysis, the minimum price is critical. it is different for canada and for the gulf of mexico and for venezuela. >> i can take you, there are very committed different costs associated with pulling oil out of the ground in different locations. there are different grades of crude, which complicated even further. what is coming out of russia is relatively expensive to dig up. they're digging in the arctic with exxon, even if that is temporarily on hold. russia needs what hundred four dollars per barrel -- >> that is the breakeven. >> my entire knowledge comes

"x-filese back to back was quote shows. -- "x-files" shows. >> there you have it. $104. admittedly, i did not realize russia's breakeven -- >> that is a lot. it is very high. it is becoming more difficult because of the strength of the dollar in a selloff of the ruble, down 14% so for this year -- last quarter, actually. >> jagdish bhagwati on oil is a one price commodity. oil is trading in dollars. how does that affect russia? >> i think the main price -- point is prices are coming down. was a stage, russia superpower, they became a super beggar. it was completely wiped out. putin faces is what

right now, being returned to the place where he has to package at a very low price. >> to your inherent optimism, the lore oil price benefits americans. nobody is ever going to convince me that is not true. security.improves our we have always been worried , to mix metaphors, held over a barrel of the middle eastern producers. now we have another set of problems in the middle east, which is nothing to do with oil. at least that element has been taken out now. we're not dependent on them. richard haass will be talking about that, i'm sure. >> he is the one who said it was the other week that the sanctions aren't actually what is didn't damaged the russian economy, it is the price of oil. ruble tobring out the

see the glide path of ruble weaknesschart. bolivia, you mention the central bank of russia stepping in with every hour.lars >> in that precipitated the most recent selloff. >> to be clear, the chart is going up, that means your dollar buys more ruble. think about that as a weaker rbule. putin a be overcome by events in the market. we will continue with jagdish bhagwati as we look at india. important visit to the united states. what after the honeymoon can modi ring his capitalism to all of india? we speak when jagdish bhagwati on "why growth matters." ♪

>> it has been a 2014 of a set of discontent. richard haass, ambassador, with us in the next hour, as fighting continues at this moment on the syrian-turkish border. that will be one of our focus is. richard haass on ebola as well.

right now, adam johnson with our top headlines. that is thehour, cost of caring for the ebola patient houston the dallas texas health presbyterian hospital. visibility hospital is unlikely to ever collect because the patient has don't health insurance. he is on avon later. -- he is on a ventilator. the bill could total half $1 million. tim geithner on the witness stand. this is one of the key questions in a lawsuit by former chief bank greenburg who claims they cheated shareholders. 620 $59 in damages. profitnce brazing for shortfall. the were struck in history to produce this year's profit by 632 main dollars. the walkout by pilots crippled

flights for two weeks. air france has traffic fell nearly 60% from a year ago. those are the top headlines. i don't know how you're going to get to paris for the annual october shopping trip. >> what are you talking about? >> come on, with your style? >> you shouldare only twice a year and october is not one of them. >> she knew when the sales were. when do i go? >> july, january. >> we will focus on india. his startminister had here in new york. he is home. he has expedited three everett separate projects. columbia economics professor jagdish bhagwati's our guest host for the hour, focusing on international trade and how to grow through trade. how us understand -- help us understand the linkage between

capital and labor in what is effectively a very evolving dynamic relationship between the two countries right now. >> between capital and labor? that there sense too, women are he factors of production. two cop seminary factors of production. i think that is what -- >> is it misleading for us to look at the relationship as he was the place capital, india supplies labor and treat is simply in those terms? is the wrongat template to think of. i think india has capital. you always use external capital to come in. what we've been doing so far is in the previous governments, is to be very extreme difficult about having investment come in. dna,ew prime minister, his

which is where i come from, which is a practical approach to trade and investment. he has loosened up trade a great deal in his own state. on direct investment, on the equity investment, he is always shopping,e-stop actually. within a week, he would clear investments. >> when every going to see a walmart in mumbai? >> i think it will happen soon. it won't happen right away because the prime minister's party is often supported by small retailers who will actually complain about the inability to compete with big firms like walmart. >> same situation in the u.s. >> the prime minister can clear all kinds of investments, but on this 1 -- >> even though his pro-business, it is all -- >> he has to wait a little bit. in politics, you can't do everything at once.

democracy is like a minefield. you have to watch or so. he is moving in that direction. i've talked with him about that way back. he says he can't do it. >> talking about the demographics during the break, nearly one million indians every month are entering the labor force. modi how ismodi going to create enough jobs? >> by promoting a whole lot of labor-intensive investments. like in the book, which tom mentioned, we find out a lot of our investments are capital intensive. >> give us an example. heavy machinery. we went in for that. then we were exporting. you export what you produce. it is a very elementary law. the far east when and for labor-intensive investments. when you actually grow per-unit value added, you get much bigger bang for your block if you're creating demand for labor. that is what we're going to get

into. in a very big way. it is that manufactures as such, which is what we americans are talking about, but labor-intensive manufacturing. that is the edge. labor in india is so much cheaper. isn't that also -- i feel like we're going back to the 1970's are 1980's. sound like it captures the dynamism of what is happening with increased productivity now. combine possible to modern techniques with labor-intensive methods of production. these are not necessary alternatives. , going for highly capital intensive projects. they were not necessarily more efficient, but used up a lot of capital and did not create enough impact. alongside this, there was a whole lot of regulations which prevented the small friends from expanding. we got the labor law but the prime and mr. said that is what

he is going to do. minister said he is going to do. it is a bit like going up after a tsunami. he has so many things to do, that he is got to define a time path in which is going to do it. in 120 days, what he is done is quite -- >> monumental. >> of a question on the labor market. do you feel the caste system is holding back the labor market? >> no, he doesn't, for the simple reason the caste is not something you wear on your face. >> but you can tell people's names -- >> not really, no. in many cases, no last names. it is not really -- nothing that really binds you down. that is simply, dissolves the caste altogether.

if it was like the south african problem, that would be a problem. if you could see a person is black, right, that is harder to handle. i'm prejudice. >> i want to ask about my morning must-read. --is writing that do you feel the j. lo economy is tracking the developed country down? >> china, in my view, you could always call it an unfair competitor at times. india, i mean, what you're going to get is increased growth. it ups the domestic economy and as wellources pulled in

as imports from outside. i think it is a win/win situation you will get. >> jagdish bhagwati, thank you so much. euro turns this morning. ♪

>> this is "bloomberg

surveillance." signal inflation. the german 10 year grinds ever lower. the caliphate fights back. isil makes advances near the turkish border. amazon argues over unpaid employees. good morning, everyone. this is "bloomberg surveillance." i'm tom keene. joining me, olivia sterns and adam johnson. here are the top stories. markets continue to decline. asia and europe see lower equity prices. eu leaders will meet on recession fears. of frothy equity markets.

meanwhile, rush upon's central bank -- russia's central bank has intervened. they are buying rubles to slow the decline. is down 14% against the dollar in the third quarter. the u.s. and european sanctions have hit and have led to an exit this of capital from moscow. screening for ebola at u.s. airports. at risk passengers may have temperatures checked and they may also be subject to questioning. the cdc will announce steps in the next few days. secretaryhouse press talks about what has been done so far. >> we have trained our professionals to spot people with symptoms of ebola.

we had an incident in new work over the weekend -- newark over the weekend. the flight crews are doing what they are supposed to do. says that thefiat industry is still fragmented and needs consolidation. he was the architect of fiat's merger with chrysler. the cardinals of st. louis are the national league championship series, they go, rather. a three-to win over the los angeles dodgers. the cardinals will face the san francisco giants.

the giants beat the nationals, crushing ben bernanke. this is fun. there is a lot going on. the royals are the biggest surprise. >> it was painful to see washington lose. >> it would have been fun to see the washington nationals and the orioles. politicians are the to the baseball part of the nationals? or is it redskins, redskins, redskins? >> it is neither, neither, neither. they don't have time to go to the ballpark. it is one of the many problems. >> it is a long way from cigars. who are you picking? >> tom, i am a yankee fan. >> that's right. >> this conversation is going on

too long already. >> can a-rod come back? [laughter] haass says,r a-rod, hang it up. [laughter] the commodity index. the next board, please. the dow is well under 17,000. this does get your attention. s appearinghaas with is far too often in this geopolitical soup. the imf meeting is front and center. >> growth. it is slow all around the world. piece inan interesting today's newspaper about the debate in europe. germany is still saying austerity, austerity, austerity.

>> we could go anyway politically. let's focus on europe. witha merkel is meeting matteo renzi. we have seen this 1000 times. when and what will make the change? >> numbers like that. i think this austerity debate is necessary. even if europe does do what do, whatghi wants to about basic reforms? what about the work week? what about capital development? >> you are talking about a complete revamp. firing people is sacrilege in europe. debate isbe, but the too narrow. >> you see this right now with the german 10 year yield.

0.899. wo year, we are still paying the privilege of lending to germany. they have raised the prospect of eliminating 35 hour workweek. do you feel the slowdown in europe is eroding the political will for the sanctions against russia? >> i think we have maxed out on sanctions anyway. the price of crude has already come down. there is no more appetite for sanctions. things seem to have stabilized somewhat. i'm not saying it is going to be resolved. i think it is going to look an awful lot like it looks now in three or six months. i think you will have a low

level sub conflict, not quite a war. you will have continued violence and death on all sides. >> back to the conversation earlier. do you think the cast of characters we have now, the young matteo renzi, the new leader of italy, and angela merkel, do we have the right people in place? >> domestically. the question is whether they have the power. thereal question at european level is angela merkel and then there is everybody else. she is nothing if not cautious. isand when she does move, it going to be very slowly. that is her hallmark. >> this is wednesday. we had tuesday and monday of weak manufacturing data in germany. that has been the key to her strength. does that he wrote her strength? >> i spoke to some germans.

a lot of them say those numbers are not representative. they say it was everything from whether to vacation time. they said do not over read those figures. >> really? second quarter gdp still contracted. >> there was a difference between that and the kind of numbers we have for one month in terms of manufacturing out that. >> this is germany. this is supposed to be the growth engine. >> i'm just passing on what i heard. [laughter] >> shouldn't those numbers be a wake-up call? >> absolutely. for germany, you have some tips own. -- tip zone. for the other countries, it goes beyond that. the real question is whether this triggers the kind of debates we are beginning to see in france. that is interesting. whether europe can continue to do what it always has done or

whether it needs something of a new compact with its own workers and its own society. >> do you think there is growing awareness that the mario draghi "whatever it takes" is not working? >> there are limits. you almost feel sorry for central bankers because they are being asked to do everything. there is a limit to what they can do. it is true of ben bernanke and janet yellen and it is true of mario draghi. you have to deal with more fundamental issues. >> the imf singles out russia and japan. what do you feel is weighing on the economy boast -- most? >> all of the above. and the china thing is very serious. no one believes the numbers coming out of china. much slower than things are there. brazil is not working. to imagine

fundamentals changing even after the election. you keep coming back to north america and the united states. we are the one potential bright spot. but again, there are real questions. whether congress and the president, after the midterms, whether there is any possibility of working. >> tom keene, you are never this quiet for this long without something going on. >> i'm just looking at the markets. the german 10 year yield is stunning. olivia is right. they will do nothing at this meeting. >> nothing at this meeting. >> i just think it is a changed bond market. >> hard to believe. here is our twitter question of the day. what is your investment strategy as stocks selloff? ♪

>> good morning, everyone. "bloomberg surveillance." it is a total eclipse of the moon thanks to npr for a fabulous graphic. i put it out on twitter and facebook last night. event?you see this great this is a lunar eclipse. we are in between the moon and the sun. instead of bright light and the

reflection of the white moon, we see it tinged red. >> we are between the what? well done, ambassador haass. [laughter] >> it is a total lunar eclipse. "bloomberg surveillance." i'm tom with olivia sterns and adam johnson. >> the black flags of islamic state are being flown high in kobani.ie -- what about the turks? turkey has islamic state on their doorstep. they can see the smoke. what is it going to take to get them to step up? >> there are protests in turkey.

the kurdish population is putting pressure. you have massive amounts of refugees. the turks are looking out their windows and they are seeing their neighborhoods deteriorate and then some. the government has the authority to act. it is just squeamish about getting involved with syria. have mainly been focused less on isis than they are on getting the assad governor -- government out. there is no consensus on an isis for strategy. >> should we take the advance of isil as a sign that airstrikes are not working? >> they can only do so much. >> they should have stopped them from taking the city. >> i don't agree. >> there are limits to what airpower can do. you really need the ground part. >> there is a ground part. there is this battery of tanks that are not doing anything.

>> that is a potential ground part, but not a real one. for turkey, that would be a big strategic move. it would be unlike anything they have ever done in modern times and they are concerned about what it would mean getting into it. about puttingorry into motion things that could lead to more pressure from the kurdish state. >> we will be right back here on a "bloomberg surveillance." ♪

screen. on the market crisis over, we think. the international releases their full reports of stability analysis and fiscal monitor later this morning as the imf meeting begins. look for that it 10:00 a.m. this morning on bloomberg television. >> walmart has cut medical

benefits for 30,000 workers. they said they will no longer offer coverage to employees who work less than 30 hours per week. in response to mounting health care costs and the alternatives available under the alternative -- affordable care act. allgergan. bid for valiant and bill ackman first approached the company back in april. florida's retirement system is pulling its funds from pimco. the pension fund will withdraw more than $1 billion that it manages for the 401(k) program. >> that is a really interesting story. those guys are like lemmings off a cliff.

i don't make that decision. that is an interesting headline. adam, what do we have? workers are getting their day in court. they want to get paid for the 30 minutes they spend clearing security checks internally when they leave work. management doesn't want to pay them for that and says it is just part of the deal. our news reporter is joining us in front of the supreme court. this really seems to boil down to how you define work. how is that defined by u.s. law? >> it is somewhat complicated. there is a statute called the fair legal standards act. that if youit says were walking to or from your car , you don't get compensated. there are some exceptions.

the supreme court said if you are putting on protective gear and you have to walk to your workstation, you get compensated for that time. this is a new question for the court. they have never had to consider security screenings. workdon't happen until the is done. they make sure employees are not stealing something. >> that is a very negative view of labor. how went to a guinness? >> it is certainly antagonistic. -- how antagonistic is it? >> it is certainly antagonistic. there are a number of other cases involving other companies raising the same issue. >> greg, who is the justice to watch? is certainly an interesting justice to watch. it is always hard on statutory questions. it is very difficult to predict

how they will read the statutory language. this court has been unanimous a lot of times and in different directions. all have to recuse themselves because they get amazon stuff at their front door? >> i don't think so and i will not recuse myself either. [laughter] there are a number of cases and they seem to focus on discrimination. not just what is happening at amazon, but can you get into some of the details? ups, perhaps it has to will a pregnant women certainly way so they do not have to carry heavy boxes. >> this is a case that will be argued in december. upsman gets pregnant and says we treat somebody who was pregnant like we treat somebody who has an off the job injury. if you get injured on the job,

we will make an accommodation. her doctor says you cannot lift more than 20 pounds. they said, sorry, you cannot do the job so she had to go on unpaid leave. >> fascinating. greg, you are on top of this. thank you for joining us. i want to point out to viewers that greg is a lawyer who clerked for the federal court in andissues intimately. read all his stories on bloomberg.com. >> richard haass is with us that well. we need a domestic policy. we need a strong judicial system. how do you full do your judicial system analysis into the legislative and executive political systems? are they active? it is a different court. isn't it? court refused to take up the challenge is to the gay marriage law. what it does and what it does

not do. it is part of the mix. the cases are really, really interesting. i will hear the supreme court talk about the case between the of the congress and the executive branch. ofis over the question jerusalem versus jerusalem, israel and whether congress can insist that you would say that. the executive branch does not becauses to be done jerusalem's ultimate status is to be determined by negotiations under u.s. foreign-policy. it is a case over who makes american foreign policy. >> we don't love having you want for kansas city royals baseball. [laughter] >> he doesn't like that either. >> if someone says to roussell him is on their american -- jerusalem on their american

passport it is a big deal. >> whether congress can insist on jerusalem, israel. >> it is never a dolma much with richard haass. >> we have a lot more -- it is never a door moment with richard haass. >> we have a lot more coming up. ♪

>> good morning. this is "bloomberg surveillance." it is time for company news. twitter sues the federal government and demand's transparency on the surveillance of its users. twitter breaks ranks with the legal action google and other companies have agreed to follow. topay plans to relocate shanghai's financial district. -- other units are already located in shanghai. launched the largest ipo in history last month. yahoo! cuts 400 jobs in india.

they will come to the office in bangalore. more than 40% of the affected workers will be offered jobs in the u.s. no wording whether or not they will be able to get those be says. -- visas. >> this matters to our guest host richard haass. suggestsr haass that a projection of foreign policy starts with a confidence at home. the american economic confidence is near shattered amid near nonexistent wage growth. where are we going to find that? >> we are not sure. were hoping to find some out of improved education and reduced health-care costs. both are happening. more americans are spending four years in college and health care cost curve is coming down. yet, wages are stagnant.

there are more powerful forces out there. technological innovation. it is good for productivity, but not good for our workers. global competition is making it tougher and tougher. would corporate businesses are doing and saying versus the economics of the moment. can we find an economic solution? >> even though we are doing better, i think we are underachieving. of course, we can find economic growth. infrastructure projects would be a good idea. creating confidence about the predictability of the american financial system. even if we were to grow much higher, there are still questions about how that would translate into wage growth. summers writes about this. you have served in government administrations.

why can't america get organized and have a better efficiency plan? >> this is a no-brainer. it is good for the economy, employment. >> it is good for republicans and democrats. >> people can't agree on the level of federal contribution to it. you can do this with public-private partnerships. something thate republicans and democrats can get onto. it may simply be that the congress and the white house cannot agree and they do not want to give the president the win. >> is fair trade one of our challenges with wage growth? migrating jobs abroad? >> there is some of that. i am more interested in pretrade. one of the other things we could ,o is finish these negotiations give the president trade promotion authority, and get that passed.

we could do the same thing across the atlantic. there's infrastructure, trade, immigration reform, tax reform. there are a lot of things on the agenda. of theemotion export-import thing, the political football right now. >> do i think it is critical? no. selectivelyt is useful? yes. >> a fair answer. check with markets churning. here is adam johnson. >> let's take a quick look at the markets. we are up a little bit on the future as we were down earlier. s&p futures are up five points. yesterday, the dow was down 272 points. the 10 year yield is moving up ever so slightly. yesterday, we were near the lows that we had not seen for about 17 months. the euro is flattish. growth lowers the global

forecast. crude is down here and in europe. it is going to cost a little bit less at the pump this weekend. that is a big deal. oil is down. that is a credit to the world. >> you wonder where it is going, as well. >> good morning. this is "bloomberg surveillance." i'm here with tom keene and adam johnson. our guest host is ambassador richard haass. here is adam with the top headlines. >> two americans and a german have won the nobel prize in chemistry. this is for work in optical microscopes studying cells in detail. they will share the $1.1 million award. its aance is bracing for

guest profit shortfall in a long time. $632uld reduce profit by million. air france says september traffic fell 16% from a year ago. fiat's chief executive says he will step down at the end of 2018. the architect of the merger with chrysler plans to part after completing a five-year plan to expand the combined carmakers. he to charge back in 2004. he has tripled revenue and operating profit. those are the top headlines. >> the imf is flashing its global growth forecast -- slashing its global growth forecast. the chief investment officer of fixed income at blackrock is with us. that ther conviction

u.s. is going forward with the , unshaken by the imf report, wire you write and bill gross is wrong? and bille you right gross is wrong? >> there are tail winds to the economy right now. technology and innovation. the housing market. we are going to run to quarter gdp -- two quarter gdp. you are the first person that has stated the obvious. >> if you take, take out the first quarter which had this weather impact. if you take the last two and the second3 and third quarter of 2014, you are running for gdp growth.

if you strip out 2009, we are much in -- running much faster in 10 years. these are not unusual times. >> and yet we have the fed pushing the pedal to the metal and we have a 10 year that is at a 17 year. the fed is still alive and well. foraccommodative policy "considerable time." they have not removed that language. >> i think it is coming off the metal. we were talking about bifurcation in the labor economy. the long-term unemployed. >> the world studies aggregate data. usually aggregate data is a good picture. however, we are operating in a two speed economy. you have a good part of the economy that is doing exceedingly well.

looking at data from san francisco, dallas, doing extraordinarily well. when you aggregate the data, things are ok, but you have a bifurcated economy. you see tangible wage pressure. it is extraordinary. >> you have a decidedly different view than people like bill gross. i do want you, directly on mr. gross, but i do want you to comment on a single thing that people like mr. gross are off the mark on. >> you have to separate the u.s. from the global economy. economy to a closed a large extent. it is very different from the rest of the world. you take what drives the u.s. economy. outother dynamic, i laid the other reasons.

technology, innovation, energy. wanted to gor through the seven ideas. we will have much more coming up [laughter] >> it is launch week for "with all due respect." ♪

>> time for our twitter question of behavior what is your time fort strategy -- our twitter question of the day? what is your investment strategy as stocks sell off? you are watching "bloomberg surveillance." i'm adam johnson with tom keene and olivia sterns. i wanted to share my morning must-read. this is from the president of the federal reserve bank of richmond. when the central bank buys , it distortss markets. you run fixed income over at blackrock. has the fed overstepped its bounds? think that quantitative easing and aggressive policy is appropriate and has been quite appropriate for a long period of time.

we can start to evolve from the conversation we had earlier. we can start to move because we are not an unusual times. tsagree with the commen that this is dull, but the distortions are real. you can create a cost that outweigh the benefits. haassassador richard wants a stronger defensive economy. could you please explain? they raise rates once. what would be the damage? ambassador? >> there are a growing number of people worried that we are storing up in inflation problem down the road. this reluctance for the fed to begin to move. >> martin feldstein may be right or wrong. i am lost about what the worst case is. >> there is one critical dynamic.

the economy pivots off of long-term interest rates. we used to pivot off the front end of the yield curve. >> this is critical. how far up the curve do you go to where the effect is? >> certainly outside of five years. 7-15 years. you think about what drives the economy, it is confidence at the back end of the curve staying down, you can spend on the housing market and capex. move the front-end to a more normal, so it is something that is not excessive. >> can you guys meet your prospectus responsibility to your shareholders with that low yield? can you meet your future obligations? >> our obligation is to generate as much return as the market will give us. it is a 2.26 percent yield. that is our job.

to get to that. all the tools available in the marketplace to do that. >> this is my grandfather's economy. that is what i love. thank you so much. there is an eclipse right now. this is a live shot. this is out of adam johnson's bedroom window. it is a total eclipse of the moon. a total lunar eclipse. >> it is an earth sandwich. as ambassador richard haass explained. ♪

>> coming up tomorrow on "surveillance," we will continue the discussion of markets. this is "bloomberg surveillance." i'm olivia sterns with tom keene and adam johnson. >> charlie rose spoke to the former cia director leon panetta. here is what panetta had to say about the islamic state. >> i think they are every bit as fanatical come every bit as dangerous as al qaeda. we are to take the same mission against isis. it is not going to be easy.

i view this as kind of a continuum from 9/11. 9/11, we declared war on terrorism because of the attack they made on the country. sweepou look at the broad of terrorism, isis is another piece of that. they are intent on tacking -- attacking this country, as well. we have to view this in that larger context. >> you conceal he on panetta tonight on "charlie rose" on bloomberg television. we look at leon panetta's worthy fights and henry kissinger's study of islame and islamicist relations is critical and it centers on saudi arabia. newshould we projected policy to saudi arabia as the linchpin? >> you are right. the reason that the oil prices come down is that saudi arabia

has not been in the center of what is going on in the middle east. the saudi's are potentially vulnerable at home. the day will come when groups like the islamic state will say that they need someone other than the house of saud running saudi arabia. at some point, they will have to deal with this in a military-police way and they will have to introduce reforms. >> when i look at all the different threats the royal family has, there is a must a political exhaustion. do you sense that there is a new generation? i don't see it. >> you have a real succession crisis. is 75.youngest guy it is a generalization. >> it is like the soviet union in its latter stages. >> should we be holding saudi more accountable?

>> the whole basis of saudi arabia is the house of saud with the political power and you let the religious establishment run the society and the education. for years and years, the principal funds going into religious education around the world have come from saudi arabia. we are seeing the bitter results of it. >> the breaking price for crude is creeping up. >> absolutely. saudi arabia has one of the fastest-growing populations in the world. the ability to spread around money to buy social peace is going down. is not on a long-term trajectory that is sustainable. the real question is whether and how and when it begins to change. whether it can survive in its present form, there are real questions about that. >> the fight is against a group

called islamic state. saudi arabia, as the holy kingdom, the home of the two ,ost holy cities in islam islamic state should be the biggest threat to them. why are we not seeing saudi's on the ground? is a fair question. we cannot get any of the arab states to put boots on the ground. they are giving us what we don't really need, which is help in the air. we have that covered pretty well. we are not getting a serious military effort on the ground. that is the big flaw in syria. takeed someone to territory. the saudi's, jordanians, egyptians, the turks, nobody is willing to play that role. >> thank you for mentioning the egyptians. is egypt becoming a bigger allies in saudi arabia? >> i have increasing problems with the word ally. that suggests a degree of expectation that you are going to be there for us and we are going to be there for you. i think we are entering a period

of history where there are fewer allies in every relationship is much more conditional, where we may work with you a little bit on this issue, but we will not work with you tomorrow on that issue. when it comes to saudi arabia or egypt, that is where the united states is. we do not have allies. limited we have partners. >> where will our state department be in five years or 10 years? we are evolving a diplomacy that is certainly a rigid call. -- original. it is not the clash of civilizations. i don't have a theory for it. ,> we are going to be a world we are suffering a correction in the world order. not a crash but a correction. we are getting messier. a much higher premium is put on diplomacy. you cannot wake up in the morning and assume you have what you think. the countries are not going to be aligned with us in the same way. many more issues to worry about. it is a much more difficult world.

>> i spoke to lagarde about this. there is nostalgia. >> the state is still out there, but there is not much competition. we have militias and other organizations and competition from above, the eu or international institutions or corporations. people don't like much what they see in the world. we had better experiences in iraq and afghanistan and there is a world weariness. -- may grow weary of the world, but the world is not going to let us forget it. globalization is a reality. it is not a choice. >> we are dealing with substate actors. >> things are getting wonky. the state system was a great advance. the whole ideas is that kings did not want to intervene in one

another's countries. it worked for several centuries. right now, it is breaking down. globalization. we do not have a new order to take the place of the old order. >> let's get to the agenda. >> my agenda is syria. obama meets with the pentagon for an islamic state update. we will be hearing from the president later on today. you can see smoke rising from kobani.n of th state is on turkey. a nato ally. >> they are just sitting there. , want to focus on the fed which has effectively just been sitting there doing what it is doing. we are going to get the fed minutes coming out at about 2:00. william dudley has made a couple of comments. he said mid 2015 would be an

appropriate time to raise interest rates. minutes that fed the more active role is going to be echoed by janet yellen. we have the imf meetings coming up. very predictable, very boring. maybe not this time around. there is so much going on after a summer of discontent. you wonder where we will be on monday morning as the elite meet on monday morning. >> it is time to answer our twitter question of the day. what is your investment strategy as stocks sell off? don't listen to the imf and by equities. make sure the selloff is not earnings related and by that debt. and thee market ratio consumer pattern to see if there is a trend before deciding. calling of a cell off -- sell

off, but we are 320% off. -- 3.2% off. >> there are some real as alances of opinion greenspan said, a good start for it helps everyone. >> isn't it ironic that president obama with a 41% approval rating gets no credit? is it the lack of direction that the red line has gone pink on foreign policy. ? >> it little bit. a lot of people still feel uneasy. the fact that the market is ,wice what it was six years ago they don't feel the love. >> it does not touch main street. >> it is the first night of nhl hockey. >> hay. go blue shirts.

flyers-bruins. >> is that the game tonight? >> come on, you are a boston man. >> i like the canadians. >> globalization. , thank you.aass we continue on the bloomberg television. ♪

>> i am it -- i am matt miller come in for betty liu on this wednesday. ebay and hp split we saw breakups over the last week. the latest company to explore the possibility of breaking up, it is maybe not so hard to do. former paypal ceo bill harris joins me to chat about the growing trend in tech. operator stocks down off of the growing ebola threat. it has affected hotels and cruise lines. ofill speak with the head universal health services, the ceo alan miller joins us. first, a look at our top headlines this morning. major indexes are down. european stocks are at the lowest level in eight weeks. thee is growing concern world economy is slowing down.